Ch 3: LTCI

Question 1

Long-term care definition

Answer 1

• Defined as all forms of continued personal or nursing care and associated domestic services for people who are unable to look after themselves without some degree of support.
• Could be provided in their own home, at a day centre or in a State-sponsored or care home setting.

Question 2

Long term care costs divided into groups (5)

Answer 2

• Living costs (food, clothing, heating, amenities etc.)
• Housing costs (rent, mortgage payments, and council tax)
• Personal care (additional costs of being looked after arising from frailty or disability)
• Nursing care (care that requires specific knowledge or skills of a qualified nurse)
• Intermediate care (recuperative services after an acute event occurs such as a heart attack in order to reduce avoidable hospital admission and minimise dependence on long-term care. Includes intensive therapy and support.

Question 3

Aims of long term care insurance

Answer 3

• Aims to indemnify the insured for the additional costs of day-to-day living when they are in need of long-term care that qualifies for payment under terms and conditions of the policy.
• (Although some have maximums making not full indemnity and some offer fixed cash benefits)

Question 4

Types of long-term care contracts

Answer 4

• Pre-funded
• Immediate needs plans (in affect impaired life annuities)

Question 5

Pre-funded long-term care claim definition

Answer 5

• Activities of daily living and cognitive impairment to measure dependency. (Number of ADLs failed denotes the level of dependency)

Question 6

ADLs

Answer 6

• Washing: ability to maintain an adequate level of cleanliness and personal hygiene.
• Dressing: Ability to put on and take off all necessary garments, artificial limbs or other surgical appliances that are medically necessary
• Feeding: Ability to transfer food from a plate or bowl to the mouth once food has been prepared and made available.
• Toileting: Ability to manage bowel and bladder function, maintaining an adequate and socially acceptable level of hygiene
• Mobility: The ability to move indoors from room to room on level surfaces at normal place of residence
  Transferring: ability to move from a lying position in a bed to a sitting position in an upright chair or wheel chair and vice versa
• In addition may be a mental impairment trigger (need for care or supervision as a result in deterioration of mental capacity from an organic cause

Question 7

Disadvantages of accepting guaranteed terms on LTCI policy

Answer 7

• Large variance of PV of costs of claims means that guaranteed premiums will include a substantial contingency loading.
• PH may find that experience proves to be more favourable but the guaranteed premium rates remain fixed
• Given that almost all premiums are based on age at entry and risk of health deterioration, PH’s may be locked into unnecessarily higher rates.

Question 8

Needs covered by long term care (3)

Answer 8

• Help regain as much independence as possible
• Slow down the rate of deterioration
• Provide necessary care support and environment to maintain wellbeing